Saudi cbank to maintain reserve strategy

Jeddah, June 17, 2014

Saudi Arabia's central bank will keep its current strategy for managing the country's foreign reserves, central bank governor Fahad Al-Mubarak said on Tuesday, indicating a continued emphasis on US dollar assets.

The country's net foreign assets, swelled by high oil prices, are currently worth about $730 billion, and have been growing at an annual rate of about nine per cent.

The central bank is believed to have placed over half of that amount in conservative US dollar assets such as US Treasury bonds and bank accounts.

"There is no change in our investment policies - this will continue as we are building our reserves," he said in answer to a question on whether Saudi Arabia was still interested in buying US bonds.

Earlier this month Saudi Arabia's Shura Council, an influential advisory body to the government, discussed a proposal for the country to establish a sovereign wealth fund that would invest some of its budget surpluses. Further debate is planned.

It is not clear whether the proposal will eventually be adopted or whether it could mean a change in asset management strategy, perhaps to a more active, risk-taking approach. Mubarak did not comment on the proposal on Tuesday.

At the same news conference, Saudi finance minister Ibrahim Alassaf reiterated that the country would continue to peg its rial currency to the dollar. - Reuters